Enoch Godongwana defends austerity measures

Finance Minister Enoch Godongwana wants to tighten spending in government. Picture: Timothy Bernard African news Agency (ANA)

Finance Minister Enoch Godongwana wants to tighten spending in government. Picture: Timothy Bernard African news Agency (ANA)

Published Sep 24, 2023


Finance Minister Enoch Godongwana has confirmed he will announce details on cost-cutting measures across the state when he delivers his Medium Term Budget Policy Statement in November.

National Treasury instructed departments to reduce spending as part of cost containment measures following less than projected revenue collection.

Unions have been up in arms against the decision of the government to cut spending.

But Godongwana, who was replying to parliamentary questions from the National Freedom Party MP Ahmed Munzoor Shaik Emam and DA MP Dion George, said they were aware of the fiscal constraint.

He said they want to achieve fiscal sustainability in the medium term.

“Over the medium term, the fiscal strategy aims to achieve fiscal sustainability by reducing the budget deficit and stabilising the debt-to-GDP ratio. Further details on any adjustments or additions to the strategy will be deliberated within government and released in the MTBPS,” said Godongwana.

Godongwana will deliver the MTBPS in November.

He defended the austerity measures that government was proposing to curb spending.

He said this was a necessary measure.

When he tabled his budget in February, National Treasury had made growth projections but since then the situation has changed completely and they also had to factor in the wage increases after the agreement between public sector unions and government.

The government would have to find an additional R37.4 billion for the wage agreement. Next year, this will come down to R25bn.

“The economic growth outlook has worsened significantly relative to expectations outlined in the 2023 budget given the impact of more intense loadshedding and freight and port logistical constraints, amongst other factors. The fiscal challenges in 2023/24 mainly originate from lower-than-expected tax revenue collections for the first four months of the year and tighter financial conditions that have constrained government’s borrowing programme and led to higher borrowing costs. These developments happened after the Budget and after 2023 public-service wage agreement was signed in March 2023,” said Godongwana.

Godongwana said in the MTBPS they will also give an outline of what is likely to come out of the budget next year.

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